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. Last Updated: 07/27/2016

Exxon Rumors Buoy Yukos, Sibneft Shares

Shares in oil firms Yukos and Sibneft closed sharply higher on Thursday after a web site said ExxonMobil may be on the verge of buying a stake in the combined firm after the two merge.

The web site, Mergermarket.com, quoted an unnamed government source as saying a 25 percent stake in YukosSibneft could go to ExxonMobil for $17.5 billion.

It also suggested that the joint appearance of Exxon CEO Lee Raymond and Yukos CEO Mikhail Khodorkovsky on an energy sector panel Friday morning at the World Economic Forum, just prior to President Vladimir Putin's address, was a likely venue for such an announcement.

Putin is said to have met with top Exxon officials during his visit last week to the United States.

A former fuel and energy minister, Sergei Generalov, was also quoted by the web site as saying the two oil firms were to meet late Thursday to discuss the acquisition.

Khodorkovsky declined at a briefing of foreign journalists on Thursday evening to take any questions relating to the possible sale of shares in the company to a foreign corporate investor.

Trust Investment bank said in a closing market comment that rumors of a Yukos-Exxon deal Friday "for a 25 percent stake worth $17.5 billion saw Yukos' American Depositary Receipts up 4.2 percent with other oils following."

Yukos closed up 3.65 percent at $15.60 on the RTS exchange and was up 4.2 percent in London at $67 per ADR. Sibneft rose 8.47 percent to $3.20 on thin trade.

A spokesman for Exxon at the Texas headquarters of the world's largest listed oil company said: "We simply don't comment or speculate on rumors regarding future business decisions." But he confirmed that the company was "certainly very interested in future opportunities in Russia."

Yukos and Sibneft declined to comment, and another trader said the market was more focused on rumors that Yukos and Sibneft were about to announce the completion of their merger.

Chris Weafer, the chief strategist at Alfa Bank, said most observers thought Yukos would wait to sell a stake to a foreign investor until after the Sibneft merger was completed.

That way, he said, "they would have grown both reserves and production to a higher level," raising the asking price for the stake. "It is unlikely that Exxon or Chevron [the other oil major rumored to have been interested] would be happy to get involved now because of political, pipeline and tax uncertainties," Weafer said.

The government has proposed to levy higher taxes on oil companies, and promises to add new export pipeline capacity seem to have stagnated.

Weafer said this may have pushed Yukos into selling only a 25 percent stake now -- rather than the 40 percent some have said was on offer -- so as to lock in a larger deal later. "That would give them political protection and it would lock in the merger," he said.

The share-price gains by the two oil companies helped drive the RTS index to a fresh all-time high of 588.44 points

Most traders said the Mergermarket.com report had triggered the rise in the two oil stocks.

(Reuters, MT)